Herein we return our attention to
the phenomenon of the rise of Intellectual Property (IP) in the world’s Electronics Industry, a segment of Electronic Design Automation (EDA) that Henke Associates began reporting on separately in 2003.

At the beginning, we covered eight (8) publicly-traded IP companies originally (called the "Group-of-8" or "G8"), as representative of the financial state of the nascent Electronics IP Industry. Subsequently, ARM absorbed Artisan Components in 2004; Mentor Graphics acquired LogicVision in 2009; and Synopsys bought Virage Logic in 2010. So nowadays, when we report on the Electronics IP Industry quarterly financials, the G5 below are included:

EDA WEEKLY readers will recall that an entire issue was devoted to Virage Logic, then independent with HQ in Fremont, CA. That article was first posted on December 22, 2009.

Today we devote the current October 17, 2011 issue of EDA WEEKLY to
CEVA, Inc., whose headquarters are officially in
Mountain View, CA:

For text review and fact checking this new article on CEVA, we have again invited into service
Mr. Mike Sottak of WiredIslandPR. Mike was first introduced to EDA WEEKLY readers as part of the EDA WEEKLY issue entitled, “Welcome SpringSoft,” first posted on May 02, 2011:

Focus on Programmable DSP Positions CEVA for New Levels of Success in the IP and SoC Worlds

“We see CEVA as the next ARM in mobile growth.” Barclays Capital

When you are in the semiconductor IP business and people start referring to you as the ‘next ARM’, you must be doing something right.

Such is the case with long-time Digital Signal Processing (DSP) IP supplier CEVA, which has been quietly gaining market share against traditional DSP
[1] chip suppliers, racking up design wins at key chip makers, systems companies and original equipment manufacturers (OEMs) in high growth markets such as wireless communications and mobile computing devices. CEVA, analysts say, is following the proven model that ARM used to establish dominance in the CPU space (to the point where even the world’s largest chip maker, Intel, feels their pressure), but with a key difference – CEVA has a laser focus on DSP.

Like ARM, CEVA has patiently and steadily built a following of adopters – the company has close to 300 licensing agreements in place -- who see the time and costs benefits of the company’s strategy: supplying high-performance, low-power and flexible solutions to enable a range of digital processing applications. CEVA has achieved a market share of 41% in the baseband DSP market (source: Strategy Analytics, CEVA internal data), and, as its design wins mature and expand, the company’s royalty-based model is fueling even more growth. Last year CEVA’s technology was shipped in more than 600 million chips and it projects that that figure will double within 2 years. As it expands its focus on next-generation wireless (e.g. 4G/LTE), as well as the proliferation of portable multimedia and home entertainment applications, the company’s growth is set to continue.

CEVA’s market share in DSPs for baseband has grown rapidly as more sophisticated phones and other consumer devices come to market

Like ARM, CEVA is well-positioned in a perfect storm of change happening in the IC design world. First, chip developers and system makers are shunning the inflexibility and high costs of using discrete DSP chips or ASICs for DSP functionality. CEVA’s approach is to deliver licensable solutions that can be integrated into system-on-chip (SoC) designs – and offer a degree of programmability and customization not previously available from fixed architecture offerings. Second, as consumer markets are thirsting for more and more digital content and higher quality in mobile devices, DSP technology’s importance continues to escalate. A programmable DSP solution that can deliver the processing horsepower, combined with the low power consumption needed by portable devices, are just the features that product developers need.

The typical supply chain for CEVA involves licensing its IP to chip makers, who then integrate CEVA’s technology into SoCs for a wide range of products

It’s no wonder that the entire world’s top-selling mobile handsets have CEVA inside. And top electronics brands, including heavyweights like Intel, ST-Ericsson, Broadcom, MediaTek, Samsung, LG, Sony, and Spreadtrum, to name just a few of the high profile CEVA licensees, use the company’s DSP solutions. As analysts from Barclays Capital wrote in a recent report on CEVA, “Handset vendors compete on features and functionality, not the DSP, and CEVA is the merchant beneficiary of this trend.” In other words, having a reliable “off the shelf” solution to meet the DSP requirement in their products allows developers to concentrate on how they can differentiate (which may in fact be through how they customize and program the CEVA DSP offering – another advantage of CEVA technology being fully programmable). As a result, CEVA hopes to have more than 50% of the market for cellular baseband DSPs within the next two years, as the continued shift toward programmable IP-based technology accelerates.

A Brief History

CEVA started humbly enough 20 years ago as an R&D division of DSP Group, a maker of digital communication chips for DECT cordless solutions. In 2002, led by a group that included now CEVA CEO Gideon Wertheizer, the DSP division was spun out of DSP Group and merged with Irish IP Provider Parthus Technologies (which focused on Bluetooth and storage IP – SATA and SAS) to form ParthusCeva. Eventually the Parthus part of the name was dropped and the core group of developers took root in
Herzelia, Israel, still where the majority of the company’s development takes place, although CEVA is officially headquartered in Mountain View, California.

CEO Wertheizer has maintained the core management team throughout most the company’s history. This includes Yaniv Arieli (CFO), Issachar Ohana (EVP, Sales), Menachem Stern (VP, R&D), Erez Bar-Niv (CTO) and Eran Briman (VP, Marketing). All have long track records in DSP development. Aviv Malinovitch (VP, Operations) joined in 2007. See
Footnote [3] for Executive BIOs.

In CEVA’s formative days, cell phones were still a novelty and there really was no single dominant market for DSP technology, nor were the processing requirements as demanding as they are now. CEVA found its niches in areas like audio chips, hard disk drives, DVD players, and TV tuners – markets it still participates in today. The firm had early design wins at companies such as Infineon, Sony, ROHM, Samsung, Atmel, and Zoran, albeit in lower volume products. Many product developers had their own internal DSP’s at this time, and the discrete DSP market was dominated by TI, Freescale and Analog Devices – all of which had much larger sales forces and incumbent products, and CEVA struggled to find large volume wins.